AABAR Block SARL & Anor v Maud, Court of Appeal - Chancery Division, June 11, 2018, [2018] EWHC 1414 (Ch)

Resolution Date:June 11, 2018
Issuing Organization:Chancery Division
Actores:AABAR Block SARL & Anor v Maud

Case No: 1978 of 2015 (BR-2015-001180)

Neutral Citation Number: [2018] EWHC 1414 (Ch)




Royal Courts of Justice

7 Rolls Building, Fetter Lane,

London EC4A 1NL

Date: 11 June 2018



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David Allison QC (instructed by Freshfields Bruckhaus Deringer LLP) for Aabar

Antony Zacaroli QC and Ryan Perkins (instructed by Stephenson Harwood LLP) for Edgeworth

Andrew Clutterbuck QC and Joseph Wigley (instructed by Bryan Cave Leighton Paisner LLP) for Mr. Maud

John Brisby QC and Alastair Tomson (instructed by Paul Hastings (Europe) LLP) for Global Asset Capital Europe LLC

Andrew Rose (instructed by Paul Hastings (Europe) LLP) for Navarro Ventures S.A.R.L.

Hearing dates: 15-18 November 2016

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  1. This is the judgment on a petition for a bankruptcy order to be made in respect of Mr. Glenn Maud (``Mr. Maud''). The background to the bankruptcy proceedings is both complicated and highly unusual. The bankruptcy petition was presented on 15 June 2015 and the hearing of the petition to which this judgment relates took place after I had allowed an appeal against a decision of Mr. Registrar Briggs making a bankruptcy order in relation to Mr. Maud in mid-2016. I allowed the appeal in essence because I took the view that the Registrar had not fully considered the class interest when deciding to make the bankruptcy order. The consequence was that I heard renewed argument over several days from a number of Mr. Maud's creditors as well as from the petitioning creditors and Mr. Maud himself.

    The commercial background and the main protaganists

  2. The bankruptcy petition is merely one aspect of a far wider set of proceedings in England and Spain which have at their heart the financing and a battle for the ownership of a group of Spanish and Dutch companies known as ``the Marme Group'' that owns a very substantial office and real estate complex in Boadilla del Monte, Madrid. That complex has been let on a long lease to a company in the Santander Banking group and houses the international headquarters of Banco de Santander. The complex is known locally as ``the Financial City'', and the asset that it represents has been referred to throughout the proceedings as ``the Santander Asset''.

  3. The shareholding of the parent company of the Marme Group which owns the Santander Asset is currently registered in equal proportions in the names of Mr. Maud and a business associate of his, Mr. Derek Quinlan (``Mr. Quinlan''). The Santander Asset is worth several billion euros, but the companies in the Marme Group are heavily indebted as a result of incurring the finance to acquire the Santander Asset, and they have entered insolvency proceedings in Spain. In the course of those proceedings, the Spanish court has approved a liquidation plan under which the assets of the group - principally the Santander Asset - will be sold to the highest bidder. There have been a number of legal challenges that have delayed the implementation of that plan, and more recently a rival proposal has been made for the companies in the Marme Group to exit liquidation by paying or otherwise satisfying all of their creditors under section 176 of the Spanish Insolvency Act.

  4. For present purposes, the main protaganists in the current proceedings and in relation to the Spanish insolvency are (i) Mr. Maud; (ii) a number of investment companies with which he has formed an alliance, including in particular a private equity firm based in California called Global Asset Capital Europe LLC (``GAC'') which is part of a group that has been an active acquirer of office buildings in Europe leased to large corporates, and a London-based investment firm called AGC Equity Partners (``AGC''); (iii) Aabar Block S.a.r.l. (``Aabar'') which is an investment company controlled by the Abu Dhabi sovereign wealth fund, and one of the joint petitioners for Mr. Maud's bankruptcy; and (iv) Edgeworth Capital (Luxembourg) S.a.r.l. (``Edgeworth'') which is an investment company and the other joint petitioner. Edgeworth is associated with and advised by Mr. Robert Tchenguiz (``Mr. Tchenguiz''), who is a property entrepreneur and who introduced the opportunity to acquire the Santander Asset to Aabar.

  5. Where appropriate, I shall refer to Aabar and Edgeworth collectively as ``the Petitioning Creditors''. As I shall explain, however, although Aabar and Edgeworth originally cooperated with a view to acquiring the Santander Asset and jointly presented the petition for Mr. Maud's bankruptcy, they have since fallen out in spectacular fashion. In particular, in June 2016 Aabar demanded repayment of monies owing by Edgeworth arising from their joint enterprise and indicated an intention to enforce its security over the rights which Edgeworth has against the companies in the Marme Group and Mr. Maud. This prompted Edgeworth to commence Commercial Court proceedings and it obtained interim injunctive relief against Aabar to prevent such enforcement. By the time of the hearing before me Edgeworth and Aabar were no longer united in their approach to the bankruptcy petition, and they have since fought a contested trial of the proceedings in the Commercial Court before Popplewell J.

    The Marme Group and the acquisition of the Santander Asset

  6. The Santander Asset was originally acquired in September 2008 by the Marme Group which consists of three companies. The Santander Asset was owned and operated by a Spanish company, Marme Inversiones 2007 S.L. (``Marme''). Marme was and is wholly owned by a Dutch company, Delma Projectontwikkeling BV (``Delma''), which in turn was and is wholly owned by another Dutch company known as Ramblas Investments BV (``Ramblas''). One half of the shares in Ramblas were and are registered in the names of each of Mr. Maud and Mr. Quinlan.

  7. The acquisition of the Santander Asset was financed by a number of loans agreed on 12 September 2008:

    a) A ``Senior Loan'' of €1.575 billion to Ramblas through a syndicate of banks headed by Royal Bank of Scotland (``RBS'').

    b) A ``Junior Loan'' of €200 million from RBS to Ramblas, which was secured, among other things, by (a) a pledge executed by Mr. Maud and Mr. Quinlan in favour of RBS over their shares in Ramblas (the ``Ramblas Share Pledge''), (b) a pledge executed by Ramblas in favour of RBS over its shares in Delma (the ``Delma Share Pledge''), and (c) a personal guarantee executed by Mr. Maud and Mr. Quinlan in favour of RBS limited to €40 million (the ``Personal Guarantee'').

    c) A ``Personal Loan'' of €75 million by RBS to Mr. Maud and Mr. Quinlan jointly and severally, which loan was secured over various assets of Mr. Maud and Mr. Quinlan. Pursuant to its terms, the monies advanced under the Personal Loan were on-lent to Ramblas together with other funds from Mr. Quinlan and from Mr. Maud's company, Cruz Holdings Limited (the ``Shareholder Loans'').

  8. In September 2010 Mr. Maud and Mr. Quinlan made late payment of interest on the Personal Loan, which entitled RBS to accelerate the loan and make demand for its repayment. RBS, which had its own difficulties at the time, made such demand on 19 September 2010. This produced only a partial repayment of €25 million.

  9. Aabar and Edgeworth combined to take advantage of the opportunity to acquire the Santander Asset at some point in 2010, and at the end of November 2010 they entered into an agreement to buy from RBS (a) the rights against Mr. Maud and Mr. Quinlan in respect of the balance of the Personal Loan and the accompanying securities, (b) the rights against Ramblas in respect of the Junior Loan together with the accompanying rights under the Ramblas and Delma Share Pledges and the Personal Guarantee, and (c) the rights against Ramblas under a further agreement known as the ``Upside Fee Agreement'' (the ``UFA''). The price paid for the Junior Loan which had €200 million plus interest outstanding was €195 million: the price paid for the Personal Loan was only €5,000.

  10. After completion of the purchase of the Loans from RBS, Aabar and Edgeworth accelerated the debt, and in February 2011 they brought proceedings in England against Mr. Maud and Mr. Quinlan in respect of the Personal Loan and against Ramblas in respect of the Junior Loan. On 17 June 2011, an order was made by consent by Teare J giving judgment against Mr. Maud and Mr. Quinlan on the balance of the Personal Loan and interest, and ordering them to pay Aabar and Edgeworth a sum of about €52.6 million. Subject to credit being given for the estimated value of security held (c. €10 million), it is this judgment debt that forms the basis for the bankruptcy petition against Mr. Maud. On the same day Aabar and Edgeworth also obtained judgment against Ramblas on the Junior Loan and interest in the sum of about €216.6 million.

  11. Thereafter, Aabar and Edgeworth sought to negotiate with Mr. Quinlan and Mr. Maud. A settlement was reached with Mr. Quinlan in September 2011 under which Aabar and Edgeworth conditionally agreed to acquire his shares in Ramblas. The settlement was achieved via the involvement of some of the parties to a separate dispute over the ownership and control of an unrelated company known as Coroin Limited (``Coroin''), which owned a group of hotels including The Savoy. The connecting factor was that one of the assets pledged by Mr. Quinlan to RBS to secure the Personal Loan was a substantial shareholding in Coroin.

  12. Under the settlement, Mr. Quinlan agreed to enter into a conditional sale of his shares in Ramblas to Aabar and Edgeworth. This was achieved by a ``Deed of Sale and Adherence'' under which, subject to a condition...

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